Company management is the organization and coordination of the activities of the business in order to achieve the defined objectives. The most common form of management is the individual executive director.
For both JSCs and LLCs, the General Meeting of Shareholders (Participants) has the highest power in the company. The shareholders (participants) have a right to be present at the Meetings, participate in Meeting agenda discussions and vote, as well as have other rights defined by the law and company’s Articles of Association.
In Armenia, the LLC’s management is carried out by the following bodies:
- the General Meeting of Participants,
- the Company Board (if the company’s Articles of Association contain provisions about creating one),
- the Company Executive Body (carries out the company’s current management),
- the Audit Committee (its creation is mandatory if the company has more than 20 participants).
The General Meeting of Participants of an LLC has the following unique powers which cannot be transferred to other bodies of management unless otherwise specified by the law:
- decides on the main course of company’s actions, makes decisions about founding and participating in organizations,
- changes company’s Articles of Association and its Authorized Capital,
- forms and terminates company’s executive bodies, appoints a commercial organization or an Individual Entrepreneur as the executive,
- appoints and terminates the Audit Committee,
- approves the annual reports and the annual balance sheet,
- makes decisions about distributing company’s profit among its participants,
- approves (accepts) internal regulatory documents,
- makes decisions about issuance of securities,
- makes decisions about having a company audit,
- makes decisions about company reorganization and liquidation,
- appoints a Liquidation Committee and approves the liquidation balance sheet,
- carries out other responsibilities defined by the law and the Articles of Association.
The Company’s Executive Body (e.g. General Director, Company President) is elected by the General Meeting of Participants and can only be an individual, unless company’s Articles of Association contain provisions about the possibility of appointing a managing company as a manager.
The Executive Body has the following authorities:
- acts on behalf of the company without a POA,
- represents company’s interests and concludes deals,
- issues POAs that authorize the agents to engage in representative actions on behalf of the company,
- issues orders of appointing, transferring or dismissing company employees to (from) their positions, applies means of encouragement and disciplinary sanctions,
- carries out other responsibilities not reserved for the General Meeting of Participants or Company Board.
The General Meeting of Shareholders of a JSC has the following authorities which cannot be transferred to other bodies of management unless otherwise specified by the law:
- approves the Articles of Association, the changes and amendments to it,
- makes a decision about company reorganization and liquidation,
- appoints a Liquidation Committee and approves the liquidation balance sheets,
- elects the Board members,
- defines the maximum amount of declared shares,
- increases or decreases the company’s Authorized Capital through increasing or decreasing the nominal value of shares or placing additional shares or through redemption and repurchasing of shares,
- forms and terminates the company’s Executive Body if these rights are not reserved for the Board of Directors,
- elects and terminates the Audit Committee, approves the company Auditor,
- approves the company’s annual reports, balance sheets, accounting and distributing the profits and losses, makes a decision on the amount of annual dividends,
- forms the Accounting Committee,
- chooses the way of informing its shareholders, the mass media that will be used for public announcements,
- makes decisions about consolidation and subdivision of shares,
- makes decisions about major deals,
- makes decisions about repurchasing company’s distributed shares,
- makes decisions about establishing and participating in subsidiary or affiliate companies, holding companies, trade unions, foundations and other organizations,
- other responsibilities stipulated by the law or the Articles of Association.
The Board of Directors carries out the general supervision of the company’s activities, aside from matters reserved for the General Meeting of Shareholders. If the company has more than 50 shareholders, a Board of Directors has to be formed. If the company has less than 50 shareholders and doesn’t form a Board of Directors, its responsibilities pass onto the General Meeting of Shareholders.
The Board of Directors makes decisions about the following matters:
- the main course of company’s actions,
- Annual and Extraordinary Meetings assembly,
- resolving all issues related to the preparation and convening the Annual and Extraordinary Meetings,
- increasing the company Authorized Capital through increasing the nominal value or allocation of shares,
- issuing bonds and securities,
- determination of the Market value of the company assets,
- purchase of outstanding shares, bonds and other securities,
- formation and dismissal of company’s Executive Body,
- remuneration and compensation for the company Auditor,
- recommendation regarding the size and procedure of paying the annual dividends to the shareholders,
- using the company’s reserve or other funds,
- approval of internal documents regulating the activities of the management bodies,
- establishing subsidiary and dependent companies, branches, representative offices,
- approval of the company’s structure,
- approval of the annual budget and its execution,
- other issues defined by the law or the company’s Articles of Association.
The company’s current management is carried out by the company’s Executive Body, the sole executive body of the Company or the Company’s sole executive body and a collegial executive body. If the Articles of Association foresee both a CEO and a collegial executive body, the it has to distinguish their rights and responsibilities. In this case, the CEO also carries out the responsibilities of the head of the collegial executive body.
With the exception of the responsibilities reserved for the General Meeting of Shareholders and Board Of Directors, the Executive Body deals with all issues concerning the current management of the company. The General Meeting of Shareholders can make a decision about appointing a managing company or an Individual Entrepreneur as the Executive Body.
Company’s General Director has the following responsibilities:
- manages the company assets, concludes contracts on behalf of the company,
- represents the company in Armenia and outside of its borders,
- operates without a POA and issues a POA if needed,
- signs contracts (including employment contracts),
- opens bank accounts,
- presents the company’s internal regulations, regulations of separate units, the company’s organizational structure and staffing to the Board of Directors for confirmation,
- issues orders, directives, guidelines and monitors their performance,
- hires and dismisses the employees of the company,
- applies means of encouragement and disciplinary sanctions,
- repurchases company’s outstanding shares if this authority is granted by the Articles of Association or the General Meeting of Shareholders.